The Search For Best Practices

Doing the Right Thing the Right Way

Rob Reider

• Publisher: Business Expert Press
• Year: 2014
• Print ISBN:
  9781631570773
• eBook ISBN:
  9781631570780
• Topic: Business
• Subtopic: Business Strategy
• Index: Business

The Search for Best Practices will help you do the right thing and in the right way in spite of organizational roadblocks. It gives a real "how to" look to assist management and operations personnel to analyze their operations in a program of continuous improvements and on-going search for best practices so that each entity operates most economically, efficiently, and effectively—tied into why the entity is in existence in the first place. Best practice techniques assist the company in identifying its critical problem areas and treating the cause and not the symptom. With sensible business principles as the hallmark for the company's quest for best practices, the company can be clear as to the direction of movement and avoid merely improving poor practices or matching competitors' less than desirable practices—that is, being less inefficient than competitors. Clear business principles that make sense to all levels of the organization allow the company to identify and develop the proper best practices. In this manner, everyone in the organization is moving in the same desired direction—and singing from the same songbook. The viruses that corrupt a business organization can be widespread and quite contagious. Nouveau quick fixes may be okay in the short term, but over the long haul, the company needs to know what they are doing. If the company doesn't, some other company will.

CHAPTER 1

Overview: Knowing Where You’re Going

Organizations have been in existence for thousands of years, some successful and long lasting, others short lived. Through the years there has been no clear-cut criterion or formula for success. Many business organizations have been successful through such intangible attributes as dumb luck, falling into a niche marketplace, being the first, consumer acceptance, and so on. Other companies using the best available business acumen and methods have failed miserably. Identifying, implementing, and maintaining the secrets of success are an elusive target. Banking on what has worked in the past and your own internal ouija board is an ineffective substitute for objective internal appraisal and external comparison and analysis in the search for best practices. The quest for best practices maintains the organization’s program of continuous improvement and helps to gain competitive advantage.

The search for best practices begins with an analysis of existing operations and activities, identifies areas for improvement, and then establishes performance standards on which the best practice can be measured. The goal is to improve each identified activity so that it can be the best possible, and stay that way. The best practice is not always measured in terms of least costs, but may be more in terms of what stakeholders value and their expected levels of performance.

THE BEST SYSTEM IS THE SIMPLE SYSTEM— AND THE ONE THAT WORKS

Before one even thinks about what best practices might be relevant for the organization, it is necessary to determine why the organization is in existence. When I ask my clients this question, invariably the answer is to make money. Although this is partly true, there are really only two reasons for an organizational entity to exist:

1. The customer service business: To provide goods and services to satisfy desired customers so that they will continue to use the organization’s goods and services and refer it to others. An organizational philosophy that correlates with this goal that has been found to be successful is “to provide the highest quality products and service at the least possible cost.”

LET THE CUSTOMER BE YOUR GUIDE, DON’T SELL THEM WHAT YOU WANT, LET THEM PURCHASE WHAT THEY NEED

2. The cash conversion business: To create desired goods and services so that the investment in the organization is as quickly converted to cash, as possible, with the resultant cash-in exceeding the cash-out (net profits or positive return on investment). The correlating philosophy of this goal can be stated as follows “to achieve desired organizational results using the most efficient methods so that the organization can optimize the use of limited resources.”

GET THE CASH FIRST OR BEFORE YOU DELIVER THE PRODUCT OR SERVICE— LEVERAGE THE USE OF OPM (OTHER PEOPLE’S MONEY)

This means that we stay in business for the long term to serve our customers and to grow and prosper. A starting point for establishing desired best practices is to know which business the organization is really in (such as the previous two) so that operational efficiencies and effectiveness can be compared.

IT IS NOT THE SOURCE OF THE BEST PRACTICE THAT IS IMPORTANT, BUT WHETHER IT WORKS IN YOUR SITUATION

Once short-term thinking is eliminated, managers realize that they are not in the following businesses and best practice decision making becomes simpler:

• Sales business: Making sales that cannot be collected profitably (sales are not profits until the cash is received and all the costs of the sale are less than the amount collected) creates only numerical growth.

It’s not booking sales, it’s collecting the cash

• Customer order backlog business: Logging customer orders is a paperwork process to impress internal management and outside shareholders. Unless this backlog can be converted into a timely sale and collection, there is only a future promise, which may never materialize.

Backlog is an indication of inefficient
customer order scheduling

• Accounts receivable business: Get the cash as quickly as possible, not the promise to pay. But remember, customers are the company’s business; keeping them in business is keeping the company in business. And, normally, the company has already put out its cash to vendors and into inventories.

Collect the cash, not the promise to pay

• Inventory business: Inventory doesn’t equal sales. Keep inventories to a minimum—zero if possible. Procure raw materials from your vendors only as needed, produce for real customer orders based on agreed-upon delivery dates, maximize work-in-process throughput, and ship directly from production when the customer needs the product. To accomplish these ...

Table of contents

• Cover
• Halftitle
• Title
• Copyright
• Abstract
• Contents
• Preface
• Chapter 1: Overview: Knowing Where You're Going
• Chapter 2: Customer Service
• Chapter 3: Cash Conversion
• Chapter 4: Corporate Culture
• Chapter 5: Organization Structure
• Chapter 6: Organizational Atmosphere
• Chapter 7: Organizational Communications
• Chapter 8: Management
• Chapter 9: Personnel
• Chapter 10: Operating Systems
• Appendices
• About the Author
• Other Books by Rob Reider
• Index
• Ad Page
• Cover